A pair of recent Gallup Polls shows distinct loss of confidence in the US economy. The first poll shows Americans’ Economic Confidence at the 2011 Low. A second poll shows 55% still think the economy is in a recession, or worse.

Please consider Americans’ Economic Confidence Declines Further

Gallup’s Economic Confidence Index dropped to -39 in the week ending April 24 — a new weekly low for 2011. This continues a downward trend that began in mid-February. The current deterioration of confidence contrasts sharply with the improving trend found at this time a year ago.

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Optimism About Economic Outlook Drops to 2011 Low

Slightly more than one in four Americans said the economy is “getting better” last week. This measure has been declining since mid-February, and is now at its 2011 low. Far fewer Americans currently feel the economy is improving than held that expectation a year ago, when 41% said things were getting better.

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Just 12 months ago, economic confidence was improving and there was talk of “frugality fatigue.” The U.S. saw a sharp spike in spending — particularly among those with higher incomes — during May 2010. Things were looking up for the nation’s retailers and the economy as a whole until the debt crisis in Europe surfaced.

This year, economic confidence is going in the opposite direction. There is an increasing danger of stagflation as prices surge and the economy slows. As a result, retailers and the economy could find it difficult to match last May’s sales performance in 2011.

Survey Respondents Think US Still In Recession

For example, please consider More Than Half Still Say U.S. Is in Recession or Depression

More than half of Americans (55%) describe the U.S. economy as being in a recession or depression, even as the Federal Open Market Committee (FOMC) reports that “the economic recovery is proceeding at a moderate pace.”

Right now, do you think the economy is growing, slowing down, in a recession, or in an economic depression?

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Although economists announced that the recession ended in mid-2009, more than half of Americans still don’t agree. These ratings are consistent with Gallup’s mid-April findings that 47% of Americans rate the economy “poor” and 19.2% report being underemployed.

In another possible disconnect with monetary policymakers, many Americans may not see the trade-off Bernanke suggests between promoting a stronger economy and experiencing higher inflation. Right now, prices are soaring, yet the latest Gallup Daily tracking data show that 67% of Americans say the economy is “getting worse.”

Majority Do Not See A Recovery

Is there a recovery? The answer is in the eyes of the beholder. Turn on mainstream media and the answer would likely be a resounding yes. Take a poll of average citizens and the answer is clearly different.

The one bright spot in the Gallup survey is 27% of respondents now think the economy is growing. This is up from 3% in September of 2008. However, there are more who think the US is in a depression than a recession, and more who think the US is a depression than think the economy is growing.

With rising gas prices, rising food prices, falling real wages, and falling nominal wages for many households, it should not be difficult to figure out reasons for declining sentiment.

Recovery is a Mirage

There is no real recovery, at least in any meaningful sense. Unemployment is down, but employment is not up. The economy is finally adding jobs, but at snail’s pace compared to any normal recovery.

Mean Unemployment Duration Weeks

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If you lose your job, good luck finding another one quickly. You will need it.

Civilian Employment

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Does that depict a recovery? Before you answer, bear in mind that Bernanke estimates that it takes 125,000 jobs a month just to hold the unemployment rate flat.

The only reason the unemployment rate has fallen is 2.3 million workers dropped out of the labor force in the last year alone, smack in the midst of an alleged recovery.

Take away government spending, unemployment insurance, and food stamps and you have a widespread economic depression. Gallup respondents realize that; The average commentator on mainstream media doesn’t.

Mike “Mish” Shedlock
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